Here is the Forbes article reprint, page 180 from the March 10 1997 edition:
Superbugs, superdrugs
By Michael Gianturco
Michael Gianturco is president of The Princeton Portfolios. His latest book is How to Buy Technology Stocks (Little, Brown, 1996).
ANTIBIOTICS ACCOUNT FOR 10% of pharmaceutical sales worldwide, or $26 billion annually. Variations on just 9 basic chemicals have given rise to well over 100 of these antibacterial agents.
That's not quite enough. In the course of a two-year study completed in 1995 by researchers at Cornell University Medical School, there was a fourteenfold increase in the number of patients infected by bacteria impervious to all commonly used antibiotics, including Lilly's Vancomycin, a drug commonly viewed as a last line of defense against resistant bacteria.
Needed: A new superdrug to beat back the superbugs. Or rather, several superdrugs. The little critters are constantly evolving, eventually outsmarting every medicine you throw at them. No one drug can expect to claim this complex market wholly, or for very long.
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For that reason I would not invest in the prospects for any one medicine. Instead of betting on the drug firms that have promising antibiotics in the pipeline, you should invest in drug discovery tools. Buy into a company that has the scientific methods for repeatedly coming up with new antibiotics. Such methods will always be in demand, and they are certainly in demand right now.
Three firms, all essentially pure plays, are worthy of note in the field of antibiotic discovery: Genome Therapeutics of Waltham, Mass., Cubist Pharmaceutical of Mountain View, Calif. and Microcide Pharmaceuticals of Cambridge, Mass.
Genome Therapeutics. You've heard about the $3 billion project to sequence the human genome-that is, the entire deoxyribonucleic acid blueprint for a human being. Genome Therapeutics has under way a more modest program to write down the genetic blueprints of bacteria. These blueprints are like a battle map for fighting resistant bacteria.
Genome Therapeutics has already written down the DNA sequence for Helicobacter pylori, which causes ulcers. It has also sequenced the DNA for Staphylococcus aureus, the ubiquitous cause of skin, wound and blood infections in hospitals. The company has revenue from partnerships with Sweden-based international drug giant Astra and with Schering-Plough. Collaboration is a typical pattern in this business. The gene company identifies likely biochemical targets in the bacteria. The pharmaceutical partner brings an accumulated library of candidate drugs and modified drugs to try as missiles against these targets.
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Cubist scientists can screen 12,000 potential drugs a day against a hit list of bacterial Achilles' heels.
Cubist Pharmaceutical. This sharply focused biotech company has identified 20 enzymes as drug targets-the 20 enzymes that a bacterial cell uses to help plug together the 20 different amino acids that make protein. Protein is the stuff of life. A drug that blocks or confuses one (or more) of these 20 crucial enzymes will abruptly put an end to the bacterium's growth and foreclose on its reproduction.
There is precedent for what Cubist is trying to do. SmithKline's Bactroban, a $100-million-per-year topical drug, works by interfering with one of the selected enzymes. It was not discovered by Cubist, but the company regards it as proof that its concept can work in a commercial product.
Cubist is screening a library of candidate drugs against a collection of targeted enzymes extracted from eight different drug- resistant bacteria. Cubist scientists can screen 12,000 potential drugs in a day, looking for one that 1) kills bacteria, 2) does not substantially affect human enzymes and 3) might ideally attack more than one bacterial enzyme or enzymes from more than one type of bacterium. In addition to its own candidate drugs, Cubist runs screens on libraries of drugs created by its collaborators in the pharmaceutical business: Bristol-Myers Squibb, Merck and Pfizer.
Microcide Pharmaceuticals. This company looks at the way resistant drugs resist. For example, some bacteria have evolved molecular pumps that forcibly eject incoming medicines. If these self-bailing cells could be deprived of their pumps, the bacteria would succumb to old-fashioned antibiotics already in widespread use. Through its understanding of how resistant bugs fight drugs, Microcide can also contrive new medicines that bypass their elaborately evolved defense mechanisms.
We own Genome Therapeutics in customer accounts and regard it as a buy below 9. Cubist is a buy below 12. Microcide is a buy below 13. ÿ |
